Seoul’s KOSPI yesterday was among the best performers and the won strengthened as the leaders of North and South Korea held a historic summit, while other Asian markets also enjoyed gains following a US rally.
After fluctuating through the week, regional stocks were on course for a positive finish as North Korean leader Kim Jong-un and South Korean President Moon Jae-in met on the border of the rival nations for talks expected to touch on Pyongyang’s nuclear program.
With hopes of a positive outcome from the first meeting between the nations’ leaders since 2007, Seoul stocks rose 0.7 percent in early trade, while the won climbed 0.4 percent against the US dollar.
“Of course, we should always be on guard for a negative development ... but as far as we can tell from the recent remarks by North Korea, the summit will be reconciliatory,” Tokai Tokyo Research Institute market analyst Makoto Sengoku said.
The upbeat mood from the meeting coincided with a much-needed rally across US markets thanks to another round of healthy corporate earnings.
US technology firms enjoyed a lift after Facebook Inc posted a 63 percent rise in first-quarter profit, undented by a data scandal.
“Not surprisingly, earnings season continues to dominate the equity landscape as investors revel in the fantastic profit results and confirming a 3 percent, 10-year [Treasury] yield is of little concern to the markets,” OANDA head of Asia-Pacific trading Stephen Innes said.
US Treasury yields this week broke the 3 percent mark for the first time in four years, raising concerns about a sharp increase in US Federal Reserve borrowing costs.
While Asian technology companies struggled to follow suit — with dealers fretting over slowing demand in the lucrative smartphone sector — most regional stock markets were higher.
Tokyo gained 0.7 percent, while Hong Kong added 0.8 percent, Shanghai climbed 0.2 percent, Sydney put on 0.7 percent and Singapore was 0.2 percent higher. Wellington added more than 1 percent, while there were also healthy gains in Taipei, Manila and Bangkok.
On currency markets, the US dollar held on to its gains against the euro, which sank on Thursday after the European Central Bank held off winding down its crisis-era stimulus and warned about the potential fallout from any possible China-US trade war.
The greenback rose well above ¥109 this week, having fallen below ¥106 at the start of the month. The US dollar was also up against most other high-yielding currencies.
Energy companies firmed on the back of another rise in oil prices, which are at highs not seen since late 2014.
“Oil prices continue to rise as investors are waking up to the reality of global demand dynamics, suggesting we’re in the midst of shifting from a supply overload to a shortage of crude in the years ahead,” Innes said. “Trade wars are on the back burner and geopolitical risk is unlikely to abate, so the path of least resistance should be higher for the foreseeable future.”
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